India’s Transport Minister plans to double the rate of road building

In an interview with Reuters, India’s Transport and Shipping Minister Nitin Gadkari has promised to add two percentage points to India’s economic growth within two years. There is much development in the works in India, but a great deal of it is stalled by land and environmental disputes. Road projects worth more than US$9 billion are among these stalled projects, tied up in red tape. Gadkari told Reuters that despite the government’s failure to pass nationwide legislation making it easier for business to buy land, there would be no difficulty acquiring land for infrastructure projects. By March 2016, he plans to be building roads at a rate of more than 30 km per day. In the next three years, he wants to complete US$75 billion of infrastructure projects.

Now that public tenders can only be held once project approval has been gained, there is, Gadkari says, less reluctance from businesses to invest in road building. “We have issued tenders for 17 road projects under the hybrid model,” he told Reuters. “Some projects we have decided to give on EPC basis (engineering, procurement and construction). Within 15 days, we will give the work order for the eastern express highway and the work will start for this 7000 crore rupee (US$1 billion) project. We will receive the tender in 15 days for the New Delhi-Meerut express highway. It’s a project of 10 000 crore rupees (US$1.5 billion) and the work will start in a month.

Last year, we managed to award only 3 PPP (Public Private Partnership) projects, but this year after March we have already awarded nine projects and by the end of the year, I expect to award more than 25 such projects. This is the first time in last seven years that there has been such a good response for the PPP projects.”

He added: “We have now decided to make all roads of cement and concrete. When we decided to build cement and concrete roads, cement companies increased the prices up to 300 – 350 rupees per bag but today we have a portal where we put 9.5 million tonnes of cement with the cost of 120-130-140 rupees per bag with tax and transport cost extra but system is cash and carry. Now 37 companies from 108 factories are selling cement through the portal. Now we have decided to set up a similar portal for steel and other material that are required for road construction.”

If the progress on India’s infrastructure projects meets Gadkari’s projection, it will be good news for the cement industry, which reported a slowdown in the most recent results.